“Working to help parents raise money-smart kids.”
Hello, friends!
I hope you enjoyed my podcast conversation with Samantha Paxson and Robin Taub. If you didn’t get a chance to listen, queue it up in your podcast player right now. 😉
To whet your appetite, nibble on this YouTube short featuring the age-old allowance question, “To chore or not to chore?”
Let’s jump into this week’s “3 Ideas to Share & Save.”
— 1 —
Add Friction: Modern conveniences are wonderful. Amazon has made shopping for people who don’t like to go shopping (yours truly) much easier. Without my Waking Up app, I would never have developed a daily meditation habit. And our easy-to-install top-of-the-seat bidet? Don’t get me started. 🚽 👀
One convenience you might want to forgo? A debit card with a built-in investing app. Let me explain why. You may recall from last week’s newsletter that Sam’s son was excited to start investing because his friend had achieved some short-term investing success. Because, as Warren Buffett likes to say, “No one wants to get rich slowly.”
While we want to encourage our kids when they get the investing bug, we don’t want to make the process so easy that they forget to think through their investing decisions.
As I mentioned last week, we might limit how much our kids can invest in individual stocks. (It’s called a “mad money” account for a reason.) This way, we feed their enthusiasm while keeping them from choking on overanxious choices.
I like the idea of creating a bit of friction between saving and spending accounts and the investing account. Transferring funds to a trading platform might give you time to talk with them about their choices. If you find they’ve really thought it through, terrific. If not, you’ve at least limited the amount of damage they can do.
For 99.99% of us, getting rich slowly is the path we will follow.
— 2 —
Betrayed by our Brains: Sam’s son is like all our kids. Heck, he’s like all of us, period!
“Because anticipation is processed reflexively while probability is processed reflectively, the mental image of winning $100 million crowds out the calculation of just how unlikely that jackpot really is…In short, when possibility is in the room, probability goes out the window.”
– Jason Zweig, Your Money & Your Brain
Our brains betray us. Constantly. This is why we (and our kids) need guardrails to protect ourselves from…ourselves. The Waiting Period is one way we can help our kids learn to be less bamboozled by their brains. I wrote about this tactic here and here, including in this passage:
“Use The Waiting Period tactic to deal with urgency. If something is over $50, then wait a week to buy it. Maybe wait two weeks for something that’s over $100. You can even apply this approach to items less than $50 if you’d like. Of course, sometimes a thing we’ve wanted for months is available in a time-limited deal. In that case, our kids (or we) should go for it!”
Our brains will betray us. Through their own experiences – and with our guidance – our kids will begin to learn how to better deal with our wonderful, awful, extraordinary gray matter. 🧠 (<— Pink matter?)
— 3 —
Deliberate Decadence: We all have splurge areas in our lives. Podcaster Debbie Millman calls these our “non-negotiables.” For me, it was my bag (remember that?). I was willing to spend what felt like a exorbitant amount on it.
I shared the controlled consumption slider with you a couple of weeks ago:
While I suggested we move towards minimalism, I didn’t mean to suggest you need to adopt a minimalist aesthetic. Like you, I love beautiful things. Images that might be described as decadent. For example, a minimalist could never have created Hieronymus Bosch’s wonderfully extravagant “The Garden of Earthly Delights.”
Instead, I advocate deliberate decadence. Ramit Sethi, author of I Will Teach You to be Rich, has made his living advocating for smart spending. Still, he is deliberately decadent about crafting experiences for friends and family because he’s saved enough money to do so, and it gives him great pleasure to indulge his loved ones. At the same time, he’s functionally frugal. He still drives his 2005 Honda Accord. (We’re kindred spirits. I still drive my 2002 Honda CR-V.)
So, let’s move our slider left, towards minimalism, while enjoying a little deliberate decadence on those things or experiences that matter to us.
Enjoy the journey!
John, Chief Mammal
P.S. Please consult with a financial or investment professional before making any decisions that might affect your financial well-being.
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